Finance News

(Reuters) – Bondholders have appealed a federal judge’s decision to approve Tribune Co’s bankruptcy reorganization plan, which would give ownership of the media company to its senior lenders. The appeals were filed with the U.S. Bankruptcy Court in Wilmington, Delaware, after U.S. Bankruptcy Judge Kevin Carey on Monday signed off on the Chapter 11 plan for the publisher of the Chicago Tribune, Los Angeles Times and Baltimore Sun.

Tribune filed for protection from creditors on December 8, 2008. Its reorganization plan would turn over ownership to JPMorgan Chase & Co, the hedge fund Oaktree Capital Management LP and Angelo, Gordon & Co, which invests in distressed companies. Aurelius Capital Management LP, which has led opposition to Tribune’s reorganization, contended that the company’s plan and a related legal settlement shortchange junior bondholders such as itself by forcing them to accept just $369 million to cover between $2 billion and $2.3 billion of legitimate claims. It said this payout, equal to between 16 cents and 18 cents on the dollar, falls “far below the lowest rung in the range of reasonableness,” and ignores the strength of claims it still has in litigation over the $8.2 billion buyout. A second appeal was filed by bond trustees Deutsche Bank Trust Co and Law Debenture Trust Co of New York, which said Tribune’s plan undercompensates senior bondholders relative to other, similarly situated creditors.

Aurelius and the trustees also asked Carey to put the bankruptcy case on hold while they appeal. In a memo to employees, Tribune Chief Executive Eddy Hartenstein said the company expected the appeals, believes they will be unsuccessful, and does not expect them to interfere with efforts to emerge from Chapter 11 “as soon as possible.” Appeals of Delaware bankruptcy court decisions normally go to the federal district court in Wilmington. The trustees are seeking to skip this step and have their case heard by the 3rd U.S. Circuit Court of Appeals in Philadelphia.
Carey’s approval of the bankruptcy plan cleared the way for Tribune to seek Federal Communications Commission approval to transfer its broadcast licenses to new owners.

FCC approval is needed before Tribune can emerge from Chapter 11. Tribune has said approval may take several months, but Aurelius said the time frame might be “considerably shorter,” warranting a halt to the bankruptcy case. Among Tribune’s other holdings are the Orlando Sentinel and Sun Sentinel in Florida, the Hartford Courant in Connecticut, and 23 television stations including Chicago’s WGN.

The case is In re: Tribune Co et al, U.S. Bankruptcy Court, District of Delaware, No. 08-13141.
(Reporting By Jonathan Stempel in New York; editing by Jim Marshall)

In the long-running dispute between software entrepreneur Reichart Von Wolfsheild and the Scott Rothstein bankruptcy trustee, there are new allegations that Von Wolfsheild isn’t living up to the conditions of a recent legal settlement.

Von Wolfsheild agreed to hand over the assets of Qtask to the trustee to settle a lawsuit. However, since then, Von Wolfsheild launched a similar platform under the name Prolific. Both Qtask and Prolific are online platforms for document and task management, along with electronic communication.

Von Wolfsheild was caught up in Rothstein’s Ponzi scheme when his software company, Burbank-based Qtask, accepted $7.5 million as an investment from Rothstein. The money was later deemed to be dirty, proceeds from Rothstein’s $1.4 billion fraud. Stettin sued Qtask and Von Wolfsheild for return of the money to the estate of Rothstein’s defunct law firm, Rothstein Rosenfeldt Adler.

Wolfsheild – who uses the title “baron” in some circumstances – was a recent co-host for a series on the History Channel called Inventions USA.

According to the trustee’s attorneys, “Qtask and Von Wolfsheild have intentionally diverted and appropriated Qtask assets and intellectual property to a new entity controlled by Von Wolfsheild… (He) transferred users of the Qtask system and their data previously held in the Qtask system.”

But Von Wolfsheild’s attorneys said in an email that the trustee has it wrong.

“Qtask is an open source operating system that is open to the world and may be used by any third party. The amended settlement agreement did not convey exclusive rights to the trustee, nor did it contain a non-compete provision. The users and the user data are not assets of Qtask and therefore could not be diverted. Users are given a choice to continue with Qtask or use the Prolific platform. It is the users that move their data, not Von Wolfsheild,” Qtask attorney Bart Houston wrote in an email.

The dispute between Von Wolfsheild has simmered since Rothstein’s scheme was exposed in 2009. At one point Qtask was fined for alleged delays in responding to court orders.

Houston said the trustee was aware that Qtask was still in a “pre-revenue” phase and users were not paying for the service.

“It would appear that the trustee and his professional are having ‘buyers remorse’, and after spending tens of thousands in fees to obtain the Qtask assets, now want to litigate more,” Houston said.